The ECB held deposit facility rates at 4% and Main refinancing operations rate at 4.5%.
The rates were held at the record high for the last 5 meetings in a row. MRO rate is the rate that banks borrow from the central bank for a weeklong duration. DFR rate is the rate at which banks make overnight deposits, it is always lower than MRO.
Inflation has retreated to close to the 2% target, but the ECB is choosing to exercise caution. Signals indicated that rate cuts will occur in June and (unlike the US) this seems likely looking at inflation data. Mid-year is also when additional figures on inflation, wages, profits, and productivity will be able to help influence decisions.
Majority investors also back June rate cuts What happens past June is still up to discretion. Some policymakers were in favour of another rate cut in July. Others were preferring to cut rates once and pause at the new level in June. Following the announcement, many European equities fell Stoxx Europe 600 (-0.4%) French Cac 40 (-0.3%) London FTSE 100 (-0.5%) German Dax (-0.5%)